How Facebook Is Redefining Privacy

Nearly 500 million people worldwide live their lives — or versions of them — on Facebook. Is there a limit to how much we'll share? CEO Mark Zuckerberg is betting there isn't

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Artwork by Yuji Yoshimoto. Photograph by Tom Schierlitz for TIME.

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Being excommunicated from Facebook today would be even more painful. For many people, it's a second home. Users share more than 25 billion pieces of information with Facebook each month. They're adding photos — perhaps the most intimate information Facebook collects — at a rate of nearly 1 billion unique images a week. These pics range from cherished Christmas mornings to nights of partying we, uh, struggle to remember. And we're posting pictures not just of ourselves but also of our friends, and naming, or tagging, them in captions embedded in the images. Not happy someone posted an unflattering shot of you from junior high? Unless the photo is obscene or otherwise violates the site's terms of use, the most you can do is untag your name so people will have a harder time finding the picture (and making fun of you).

With 48 billion unique images, Facebook houses the world's largest photo collection. All that sharing happens on the site. But in two giant leaps, the company has made it so that users can register their opinions on other sites too. That first happened in 2008, when the company released a platform called Facebook Connect. This allows your profile to follow you around the Internet from site to site, acting as a kind of passport for the Web. Want to post a comment about this article on TIME.com? Instead of having to register specifically with that site, Facebook users just have to click one button. This idea of a single sign-on — a profile that obviates the need for multiple user names and passwords — is something a lot of other companies have attempted. But Facebook had the critical mass to make it work.

Targeting Your Likes
Zuckerberg unveiled the second big initiative, Open Graph, this spring. It's a nerdy name for something that's surprisingly simple: letting other websites place a Facebook Like button next to pieces of content. The idea is to let Facebook users flag the content from as many Web pages as possible. For example, if I'm psyched about Iron Man 2, I can click the Like button for that movie on IMDB, and the film will automatically be filed under Movies on my Facebook profile. I can set my privacy controls so that my friends can find out in one of three ways that this is a movie I like. They can go to IMDB, where my charming profile picture will display on the page. They can get a status update about my liking this movie. Or they can see it on my Facebook profile.

Facebook wants you to get into the habit of clicking the Like button anytime you see it next to a piece of content you enjoy. Less than a month after launching Open Graph — which made its debut with some 30 content partners, including TIME.com — Facebook is quickly approaching the point where it will process 100 million unique clicks of a Like button each day.

The company's goal with Open Graph is to give you ways to discover both new content and more common ground with the people you're friends with. That's the social benefit Zuckerberg sees, and it's shared by those in his employ. Sheryl Sandberg, Facebook's chief operating officer, is at her most enthusiastic when she's describing Peace.Facebook.com, part of the website that tracks the number of friendships made each day between members of groups that have historically disagreed, such as Israelis and Palestinians and Sunnis and Shi'ites. "We don't pretend Facebook's this profound all the time," Sandberg says. "But is it harder to shoot at someone who you've connected to personally? Yeah. Is it harder to hate when you've seen pictures of that person's kids? We think the answer is yes."

Helping bring about world peace would be nice, but Facebook is not a philanthropic organization. It's a business, and there's a tremendous business opportunity around Facebook's member data. And Sandberg knows it. She joined the company in 2008 after helping Google build its ad platform into a multibillion-dollar business. Much like Google, Facebook is free to users but makes a lot of money (some analysts estimate the privately held company will generate $1 billion in revenues in 2010) from its robust ad system. According to the Web-research firm comScore, Facebook flashed more than 176 billion banner ads at users in the first three months of this year — more than any other site.

The more updates Facebook gets you to share and the more preferences it entreats you to make public, the more data it's able to pool for advertisers. Google spearheaded targeted advertisements, but it knows what you're interested in only on the basis of what you query in its search engine and, if you have a Gmail account, what topics you're e-mailing about. Facebook is amassing a much more well-rounded picture. And having those Like buttons clicked 100 million times a day gives the company 100 million more data points to package and sell.

The result is that advertisers are able to target you on an even more granular level. For example, right now the ads popping up on my Facebook page are for Iron Man 2 games and no-fee apartments in New York City (I'm in a demographic that moves frequently); my mom is getting ads for in-store furniture sales (she's in a demographic that buys sofas).

This advertising platform is even more powerful now that the site can factor in your friends' preferences. If three of your friends click a Like button for, say, Domino's Pizza, you might soon find an ad on your Facebook page that has their names and a suggestion that maybe you should try Domino's too. Peer-pressure advertising! Sandberg and other Facebook execs understand the value of context in selling a product, and few contexts are more powerful than friendship. "Marketers have known this for a really long time. I'm much more likely to do something that's recommended by a friend," Sandberg says.

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